on Friday, August 18, 2000 - 06:58 pm:
FAR 1.602-3(b) provides the policy for ratification of
unauthorized commitment. FAR 1.602-3(b)(5) states that
"Unauthorized commitments that would involve claims subject to
resolution under the Contract Disputes Act of 1978 should be
processed in accordance with Subpart 33.2, Disputes and
What does this mean? Does this mean that, if an unauthorized
commitment is made against an existing contract, the contractor
can submit a claim against the contract, and be paid under the
procedures from FAR Subpart 33.2 without ratification procedures
outlined in FAR and its supplements?
Or is "ratification" required for all "unauthorized
on Tuesday, August 22, 2000 - 03:36 pm:
If the unauthorized commitment arises under, or relates to a
contract, and it leads to a request for money, then according to
the Disputes Clause (FAR 52.233-1) the claim is disposed of
using Disputes procedures of that contract. Suppose someone
forgets to renew a maintenance contract of a photocopy machine.
And the machine continues to be serviced by the contractor after
the expiration of the contract. The resulting request for money
for the continued service is treated as a claim under the
Disputes Clause, not as an unauthorized commitment.
Kennedy How on Wednesday, August 23, 2000 - 12:22 pm:
Speaking generically (and going by memory of past
experience), the Disputes Clause regarding claims against the
Government only comes into play when the Contractor submits a
certified claim. Prior to that, an unauthorized committment (I
define this as direction by somebody not holding a Contracting
Officer's warrant) can be taken care of via "ratification".
Inasmuch as the contractor says "I did this under this
direction, it costs this, I want to be paid", and the Government
For example, say a Two-Star calls up the contractor and directs
them to do certain things that are deemed outside of the
existing scope of work. The two-star does not have the
contracting authority to obligate the Government to do this,
especially since it's outside the scope. The Contracting Officer
would have to step in and generate a contractual document to
cover the Government's liability after the fact. (I've seen this
happen, the action resulted in an ASBCA case, since it went to
the Disputes stage.)
This may be an oversimplification, we don't normally use the
term "ratification" around here, even though technically, that's
what it is.
on Wednesday, August 23, 2000 - 02:32 pm:
As a general rule - there may be exceptions -the law does not
recognize "apparent authority" of a Government Official.
In Kennedy's case, I would surmise that the Government, itself,
has no inherent "liability" due to the Two-Star's directive,
unless the KO has actual knowledge or should know of the
directive, in time to stop performance. "Ratification" is an
action an authorized official CAN take to cover the General's
behind - to keep the 2 Star from personally paying for the
directed service or product!
Of course, there are many more situations involving
ratification. I just wanted to comment on a misconception the
particular cited example might portray. There is widespread
belief that an official's directive automatically "obligates the
Government", simply because they are a "Two Star".
I believe the policy in FAR 1.602-3(b)(5)of resolving "claims"
arising from an unauthorized commitment may be intended to cover
One example is a directive by a COR or a directive by an ACO
above or outside their specified authority, for which the
Government (could be either the COR, the ACO or the KO) takes a
position that the directive is not a change but is a contract
requirement. The Contractor disagrees and a dispute ensues.
These actions occur frequently.
I believe the language in FAR 1.602-3(b)(5) is intended to
explain that such an act should be not be resolved using the
"ratification" procedures, once the Government determines that
the claim has merit.
The policy of handling an unauthorized commitment resulting in a
"claim" has been a source of constant gross, abuse by a certain
DOD Branch of my clients for years. They tell me the Government
can simply direct the contractor to perform extra work under
some pretext, when funds aren't available. Make the Contractor
submit a claim, in order to get paid. The KO should deny the
claim; let the Contractor appeal. The "claims judgement fund
will pay for it, eventually. "It won't be our problem, if it
results in the authorized appropriation ceiling being exceeded."
I suppose Kennedy's example could result in a claim. If the
Government uses the lack of apparent authority defense in the
case of the Two Star's directive, the Contractor can then submit
a formal claim. The claim would be handled under the Disputes
Clause. That wouldn't necessary save the Two Star from being
personally liable to somone for the cost. Happy Sails! Joel
on Wednesday, August 23, 2000 - 02:49 pm:
Ratification is required for all "unauthorized commitments."
An unauthorized commitment is an agreement that is not binding
because the Government representative who made it lacked the
authority to do so. Ratification is the act of authorized
official to approve an unauthorized commitment after the fact.
See FAR 1.602-3(a).
Contracting officers below the level of the chief of the
contracting office do not have the authority to ratify
unauthorized commitments. See FAR 1.602-3(b)(3). (They do it all
the time anyway by issuing contracts after the fact without
If a Government employee makes an unauthorized commitment to a
company by ordering supplies or services, an authorized official
must ratify it before a contracting officer can issue a contract
that will enable the company to get paid.
If a Government employee makes an unauthorized commitment to a
contractor in a matter that is related to a contract (e.g., an
unauthorized change that increases the cost of performance), the
contractor can submit a claim to the contracting officer
pursuant to the Disputes clause seeking payment under the
existing contract rather than award of a new contract. If you
read FAR 1.602-3 and FAR Subpart 33.2 together, it appears that
an authorized official must ratify the unauthorized commitment
before the contracting officer can agree to pay the claim under
the existing contract.
If no one can or will ratify the unauthorized commitment, then
the company must request payment on a quantum meruit basis
through the General Accounting Office. See FAR 1.602-3(d).
Joel on Wednesday, August 23, 2000 - 03:23 pm:
Vern, after reading your 8/23 post at 02:49 pm, I see there
apparently is a distinction between "an agreement" and a
"directive." Does this mean that unilateral Government
directives are not "unauthorized commitments"?
If the 'agreement' is not binding (I too, said that apparent
authority does not bind the Government), a "claim" would
probably generally arise when the KO refuses to ratify the
agreement, requiring the Contractor to claim. The Government
simply taking no action to write a mod to pay the Contractor for
the 'agreed work' could also result in a claim from the
Contractor. Happy Sails! Joel
bob antonio on
Wednesday, August 23, 2000 - 03:50 pm:
In 1996, GAO's authority to settle claims was changed
substantially by shifting the authority to various agencies. I
think the provision in FAR 1.6 is one of those items.
Ramon on Wednesday, August 23, 2000 - 04:03 pm:
Perhaps I'm reading too much into all the possible ways to
pay the contractor, but it appears there is entirely too much
emphasis in the interesting mechanics of tapping the Treasury
and not enough roasting the "two star."
The mechanics need to be there as extraordianry means of
correcting an extraordianry situation, but if commonly used (as
I gather from that "gross abuse" comment) it seems time to get
some stern measures going against the abusers. My general
impression is that this goes on entirely too often and the "two
star" paying is largely theoretical. Is this abuse as common as
bob antonio on
Wednesday, August 23, 2000 - 04:22 pm:
"Two-stars" can be very persuasive with GS-14 contracting
on Wednesday, August 23, 2000 - 04:56 pm:
FAR defines an unauthorized commitment as an agreement that is
not binding because the person who made it did not have the
authority to do so.
I'm not sure what you mean by "unilateral Government directive."
"Unilateral" is clear and so is "directive" (i.e., command), but
what does "Government" mean? If "Government" means an authorized
representative of the Government acting within the scope of his
or her authority, then a unilateral Government directive is not
an unauthorized commitment. But if "Government" means any
Government employee, then a unilateral directive is an
unauthorized commitment if it was issued by an employee who does
not have the authority to make it and that leads a firm or
contractor to incur costs in the belief that the Government has
agreed to pay those costs.
There may or may not be a distinction between a directive and an
agreement. Absent some statutory authority, the only authority
that the Government employee who issued the directive would have
over the contractor would be the authority to seek breach
damages if the contractor refused to comply. If a contractor
decided to comply with the directive, believing itself to be
entitled to an equitable adjustment in accordance with the terms
of the contract, then one could argue that it had agreed
to do so, since the relationship between the parties is
contractual. Thus, the directive and the compliance would
constitute an agreement. If the Government employee had no
authority to issue the directive, then it would be an
A claim is a demand arising under or relating to a contract. The
claim would probably arise when the contractor sought payment on
the basis of costs that it incurred in complying with the
directive and the contracting officer refused to pay it because
the person who issued the directive did not have the authority
to do so. The Government could deny the claim on the ground that
the employee who issued the directive had no authority and the
contractor should have know that, or it could ratify the
unauthorized commitment and pay up. Ratification is
joel on Wednesday, August 23, 2000 - 06:59 pm:
thanks, Vern. That clarified my question. Happy Sails!
Ramon on Wednesday, August 23, 2000 - 10:19 pm:
Absolutely. The "two star" is figurative. I doubt it takes
nearly that much brass in practice all too frequently.
I think what causes an itch for me in these types of discussion
is the nearly universal treatment of symptoms, not the disease.
No machine is perfect, but when mechanisms intended to cause or
inhibit some action frequently fail we have a broken machine.
I'm afraid the "governor" on this particular machine is about as
effective as the $50 fine for blasting through a stop light.
Maybe it is time to increase the risk.
bob antonio on
Thursday, August 24, 2000 - 08:41 am:
There are no easy solutions and often perils.
In the old forum, a discussion was started about a contract
awarded in the UK with the work being done in Germany. The
person initiating the thread wanted to be designated a COTR so
he could assist the contractor because he had no authority under
the contract. My concern was that by informally assisting the
contractor without authority and by relaying information to the
actual contracting officer in the UK, the individual in Germany
gave the appearance that they had authority under the contract.
If something occurred under that contract beyond its scope and
the individual in Germany saw it, I felt that there was an
opportunity for the contractor to claim that the contracting
officer in the U. K. had "constructive knowledge" of the event.
That would result in a ratification of the event. Many
ratifications result from innocent actions of program staff or
On the other hand, arrogance and ego create the problem. For
example, one individual would make tours of the contracted
effort. In addition to the government entourage, there was a
contractor entourage pursuing the individual. One of the
contractor's entourage carried a clipboard. That individual
would listen for the "do this" and "do that" phrases and write
everything down that followed. At the end of the tour, the
clipboard would be delivered to the contractor's claims
processing staff. You wouldn't believe the havoc this created.
Outside of the courts, power determines or at least influences
blame in many cases. This power would identify the innocent
errors and punish the individuals that caused them. The gross
abuses are often caused by the arrogant who have the power. Of
course these individuals are faultless and do not accept blame.
The best thing we have going is an alert contracting officer who
documents the causes for these actions in the contract file.
Every once in a while, the right individual opens that contract
file and has the opportunity to nail the arrogant.
on Thursday, August 24, 2000 - 08:53 am:
Vern - In your (4:56 pm 8/23) post, you indicated that you
weren't sure what I meant by "unilateral Government directive."
To clarify my (3:29 pm 8/23) question to you, my original, (2:32
pm 8/23) post focused on "directives" by unauthorized officials
for extra work.
This type of unauthorized commitment is more common in my
business than "agreements" between unauthorized officials and a
vendor (resulting in a new action) or a contractor (on an
After my first post, you added a post at 2:49 pm, which included
a reference to the FAR definition of an "unauthorized
commitment" as being an "agreement." Upon noticing that
statement, I re-read the FAR definition and sure enough, it
includes the word "agreement."
My 3:29 pm question to you then asked if it is necessary for
there to be an "agreement" between the ordering official and the
provider. Or is it also an "unauthorized commitment" when the
Contractor simply follows the directive (perhaps thinking it to
be an authorized or constructive change)?
I believe your 4:56 answer indicates that either a
pre-performance agreement between the parties or a one way
directive, obeyed by the Contractor, can result in an
unauthorized commitment. If not, please advise. Otherwise, I
think you answered my question.
Ramon, I guess I really stirred you up in my 2:32 pm post -
sorry. I failed to mention that we (I'm unofficially speaking
for most of my Organization, as a whole - our KO's are really
conservative but extremely fair) tactfully ignore our client's
request to lead a contractor into a claim or to deny merit on a
claim, simply because funds are tight - in hopes that the "judgement
fund will fund any necessary equitable adjustment".
I said that this client's attitude constitutes "constant,gross
abuse", because it seems to be widespread belief of their
organization. I've seen it articulated by their project
managers, by their end users and their bosses throughout my
association with them over roughly 14 years, on assignments in
four different Districts in the Middle East, Europe and the U.S.
I suspect that the client's own acquisition program must somehow
follow this philosophy or their people wouldn't keep bringing it
Just wanted you to know that it may not be as badly abused in
actual practice. Our GS-14 and 13 KO's aren't as easily
persuaded by the client's "2 Star", as some others may be, when
the others' jobs are on the line, directly working for the 2
Star. This independance is sometimes good, in that it reduces
abuse and sometimes bad in responding to the customers'
legitimate needs! Happy Sails! Joel
on Thursday, August 24, 2000 - 09:57 am:
I think that either a pre-performance, express, bilateral
agreement or a one-way directive obeyed by the contractor can
result in an unauthorized commitment.
Let me explain my thinking about the one-way directive. The
authority to direct a contractor must come from the contract,
based on the terms in a contract clause. That being the case,
when a contractor complies with a unilateral directive issued by
a Government employee, its decision to do so is presumably based
on its belief that it had agreed to do so when it signed the
contract. It is thus acting in consonance with that agreement.
This becomes a problem when the contract says that the
contractor will be entitled to an equitable adjustment when it
complies with such directives and the contractor seeks money or
some other adjustment that basis. If the contracting officer or
some other authorized official had issued the directive, then it
would have been an authorized commitment to make an equitable
adjustment. But if the person who issued the directive did not
have the authority to do so, then the directive was an
I think that it is important for everyone to understand that
contracting officers have no authority to mod contracts to make
equitable adjustments on the basis of unauthorized commitments,
unless he or she is a chief of a purchasing office or above
and has been delegated the authority to do so by the head of
the contracting activity. See FAR 1.602-3(b)(2) and (3). So
contracting officers must seek ratification of the unauthorized
If a contracting officer mods a contract on the basis of an
unauthorized commitment without having obtained ratification in
accordance with FAR, then he or she will have made an
Also, while apparent authority will not bind the
Government, the boards and courts have developed a doctrine of
implied authority, which they have used to bind the
Government to commitments made by persons who did not have
actual authority. See Cibinic and Nash, Formation of
Government Contracts, 3d ed., pp. 95-98. Cibinic and Nash
have also written extensively about ratification. See
Formation, pp. 98-106. It should be noted in this regard
that the boards and courts have developed a doctrine of
joel on Thursday, August 24, 2000 - 10:28 am:
Vern, I may be in 100% agreement with you. But I want to
point out that, in actual practice, a simple contract
misinterpretation by a COR, a field office ACO (outside their
delegated authority) or an inspector, resulting in a
constructive change, will SELDOM (I won't say never) be
considered as an "unauthorized commitment" by our KO's. Thus,
formal ratification with all its limitations, consequences and
ramifications are not used. Nobody would have a job and nobody
would take any jobs admninistering contracts if every honest
mistake or contract misinterpretation was treated as an
unauthorized commitment! I also guarantee that there would be
rashes of fist fights or worse, between those administering
contracts and the designers and spec writers who "never prepare
ambiguous or conflicting requirements".
Many, if not most, constructive change cases involve the implied
authority situation, as explained in Nash and Cibinic.
I'm sure that there are lots of legal reasons for not requiring
formal express, ratification. Nash and Cibinic discuss implied
ratification, adoption of the unauthorized act by and authorized
official, constructive or implied notice to the authorized
official through daily reports or letters, oral reporting, etc.
Happy Sails! Joel
on Thursday, August 24, 2000 - 11:37 am:
If a COR has been delegated actual authority to do something --
e.g., to inspect and accept or reject supplies or services --
but makes a mistake that results in a constructive change, then
I (as CO) would not consider that error to be an unauthorized
commitment requiring ratification. I would simply consider it to
be a mistake.
However, if an inspector knowingly exceeded his authority when
directing the contractor to do something differently than called
for in the specification, then that would be an unauthorized
commitment. If the contractor knew that the inspector had no
authority to issue the directive, then I would not be obligated
to make any equitable adjustment. But if I decided that the
conditions in FAR 1.602-3(c) had been met and that we should pay
the contractor, then I could not legally make the equitable
adjustment without obtaining ratification.
I realize the practical implications of what I'm saying and that
most COs ignore (intentionally or out of ignorance) the
ratification rules in cases like that. Still, we should know
when we're violating a rule, don't you think?
joel hoffman on Thursday, August 24, 2000 - 01:11 pm:
Vern, I totally agree with you, concerning correct policy. In
fact, what you state is COE-wide policy, practiced for the most
Our Inspection personnel are fully aware of their limitations
and the possible consequences of directing anything they KNOW to
be beyond the contract requirements. The Contractors are also
supposed to be advised during the post award meetings of
everyone's authority limitations.
I also agree with you, that known changes are improperly
directed - to the extent that there are occasions when someone
on the ground orally directs the Contractor to proceed with a
pending change. This is usually done in a good faith effort to
minimize delay or tearout costs, even though known to be
"wrong". Our field personnel are some of the most dedicated
stewards of the taxpayers dollars and it galls them to see
We have developed procedures to quickly issue formal NTP but
they aren't always followed for various reasons. I will say that
the old stumbling blocks once established by DOD/DA/COE
Headquarters to almost prohibit undefinitized contract
modifications have largely been removed.
Yes, the KO sometimes tends to look the other way - as long as
there isn't a blatant paper trail - but not always. When the
practice becomes becomes blatant, too obvious or after
contractual relationships fall apart, the KO's, Chiefs of
Construction or the District Commanders have been known to nail
somebody and initiate a ratification action. Its not fun having
to report an unauthorized commitment to the PARC's office!!!
Happy Sails! Joel
Kennedy How on Thursday, August 24, 2000 - 01:13 pm:
Gee, what a spirited discussion! I don't know where to begin!
To address Ramon's comment about the contractor clipboard, I've
been on the wrong end of this one. It was used as ammunition as
part of a larger issue before the Board. That part of the claim
was "for excessive meetings called by the Government." What was
unsaid was that the meetings were called to followup on
contractor performance problems and schedule slippages. Not to
mention engineering fixes agreed to during those visits.
As far as actualities are concerned, our activity has a
reasonably close relationship with the PMs that run the various
programs. Sometimes, the timing gets out of whack; the PM calls
the contractor, tells them to do something, and closes with "The
CO will be sending you a letter authorizing this.". I eventually
get around to doing the letter, and the CO signs off, and it's
faxed to my counterpart out there.
The Gulf War would be a good example of this; the PM says "Ship
X amount of Y to place Z immediately." Well, there certainly
isn't any contract language to cover that. But, since we had a
close working relationship with the PM, we kinda knew what they
were going to do, so we were ready to respond quickly. Still,
there were those few hours where there isn't any "CO"
Where we ran into problems is where the PM is "out of control",
we hear about it too late (if at all), and it gets way too far
down the road. No documentation, the PM disagrees, or whatever,
we go to Claims. On the other hand, if the PM says, yeah, no
problem, we did that, we forgot to tell you, we have the money,
go write a mod (or whatever), we'd probably not make a fuss. In
the pre-email days, we'd need a DF to document, with e-mail, we
just print out the message. In these days of streamlining, and
teaming within the various offices, timing isn't as much of a
problem as it once was. Still, when you have military PMs who
report to higher HQ outside of the local activity, the "Yes Sir.
Will Do, Sir." mentality can't always be suppressed.
I agree with the statement that, at least here, it doesn't
happen flagrantly very often.
My favorite story was the one where we were costing out an
effort to ship vehicles via C-5 to Saudi. The ACO called me up
and told me they were just about finished negotiating the cost
change, except for the $2200 for lumber costs. Seems that the
loadmaster would not allow the planes to fly without major
bracing. So, the contractor team went to the local lumber yard
and bought whatever it took to satisfy the guy.
I OK'd the expediture, as it was an unexpected cost, the ACO
wanted to be sure we were OK with it.
joel on Thursday, August 24, 2000 - 02:05 pm:
How about this example?
Once upon a time, we had an Area Office in a "nameless" Central
American Country, doing barracks renovation for the Army. The
Army Installation requested a ~ $1-2 million change to the
dormitory configuration and sent in current year (year end
excess) O&M funds to pay for the change. The ACO negotiated a
good, quick settlement but said it would and did take a month to
write up the mod and send in to us for the KO's execution.
The Contractor, being:
1) Central American - a good, trusting guy
2) not wanting to disrupt the on-going renovations because the
changed work was inseparable from the original work and
3) not wanting to unnecessarily increase the mod cost to the US
Government by stopping to wait for the mod,
decided to to proceed with the changed work with full knowledge
of the local ACO.
Well, the mod didn't make it to us until October -the new fiscal
year. During legal review, our Attorney discovered that the
Installation should have provided funding from the FY previous
to the previous year funds (the original year O&M money) - and
stopped the mod, dead. Of course, everyone now knew that the
Contractor was proceeding.
The District directed the Installation to cough up the correct
year funds but did not direct the ACO to stop the Contractor.
The Installation balked and a debate over correct year funding
The KO, the District Commander (O-6), the Deputy Commander
(O-5), Chief Counsel (GS-15) and Chief of Construction (GS-15)
met about this problem for a month or two, until the funding
issue was resolved.
Lo and behold, the "committee" decided a ratification action was
necessary and that - yup -they would nail the ACO (the Area
Engineer) for letting the Contractor proceed with the changed
The KO prepared an epistle to the Contractor, telling him that
he should not have proceeded with the work until he received a
mod - that the KO was going to be a good guy and issue the mod,
anyway, etc., etc.
They were in the process of having me prepare the ratification
action, when I reminded them that they - the Commander, Chief
Counsel, Deputy Commander, the KO, the Chiefs of Contracting and
Construction -- ALL -- had personal knowledge for over two
months that the Contractor was proceeding with the work!!! They
were as culpable as the ACO, who had been provided NO direction
since he sent the mod up to us.
Needless to say, the whole incident was quickly forgotten...
Happy Sails! Joel
on Thursday, August 24, 2000 - 02:30 pm:
Yikes! When you say that the ACO "knew" that the contractor was
proceeding, do you mean (a) that he and the contractor talked
and agreed that the contractor should proceed, or (b) that the
contractor made that decision on his own and the ACO knew what
he was doing and didn't stop him?
I would consider (a) to be an unauthorized commitment requiring
ratification, but not (b). I don't know how many times a
contractor told me that it was proceeding in advance of a mod
and I wrote a letter saying, "Proceed at your own risk. There's
no deal until the mod has been signed and distributed."
joel on Thursday, August 24, 2000 - 02:41 pm:
(b) is the correct answer, Vern.
The Chief of Construction then put out a directive to all of his
Area Engineers, telling them that he would yank the warrant of
anyone who knowingly allowed a contractor to proceed on a change
before the mod was issued, at their own risk or not - it didn't
matter. This was a "CYA" letter if I ever saw one.
Sounds good but let the first field office start enforcing that
directive and the whole world will come down on their head! We
all know that the one who gets the job DONE gets the Kudos while
a law abiding enforcer might as well kiss their career goodbye.
bob antonio on
Thursday, August 24, 2000 - 03:12 pm:
Here is an actual case. This has a bit of everything.
Ratification by inaction, constructive knowledge, de facto
authority, etc. You must read through about two-thirds of it to
get to the discussion.
on Thursday, August 24, 2000 - 03:40 pm:
I didn't realize that my post will result in so much
I posed the question because we have a situation where a project
manager directed a contractor to ship additional equipment under
an existing task order. The project manager did not have
authority to bind the GOVT. The KO did not know about the
I asked our Office of Counsel if FAR 1.602-3(b)(5) would apply
since there is a contract in place. They recommended that I use
the ratification procedure of FAR 1.602-3 since they felt that
all unauthorized commitment must be "ratfied". I think that most
contracting activities have the same opinion.
I want to make sure that we are doing the right thing.
Under FAR 1.602-3 and agency supplements, the individual that
initiated the unauthorized committment must provide evidence on
why the ratifying official should ratify the action. Under
ratification procedures, the contractor does not have prove to
the ratifying official why he followed the instructions of an
individual without authority to bind the GOVT.
On the other hand, the burden of proof shifts to the contractor
if he requests a claim under the Contracts Disputes Act of 1978.
Based on this and the language in FAR 1.602-3(b)(5), I think
that John Huckle post may be correct when he states:
"If the unauthorized commitment arises under, or relates to a
contract, and it leads to a request for money, then according to
the Disputes Clause (FAR 52.233-1) the claim is disposed of
using Disputes procedures of that contract."
What do you think?
on Thursday, August 24, 2000 - 04:05 pm:
Did this technical direction require additional funding or
directly result in an increase in the price?
Just for clarity--
joel hoffman on Thursday, August 24, 2000 - 04:34 pm:
Thanks, Bob. Though very detailed, it is an excellent example
of implied authority and ratification by adoption or
acquiescence. Happy Sails! Joel
joel hoffman on Thursday, August 24, 2000 - 04:55 pm:
Has the extra work actually been carried out? If not, stop it or
initiate a change to add it. If it hasn't been completed and the
Government doesn't stop it, I believe it will then be considered
a ratification by adoption.
If y'all don't want to pay for the extra work and it is truely
an "unauthorized" commitment", assuming it has already been
performed, you don't have to have the directive ratified. The KO
can deny entitlement and require the contractor to eat the cost.
The contractor can submit a claim to prove entitlement or the
contractor can sue the guilty project manager. Y'all need to
consider all the consequences, such as cost and effort involved
to defend the claim, value received, relationship with the
contractor, etc. before deciding whether or not to pay for the
On the other hand, if you decide it is best to pay for the extra
work already performed, the KO can initiate ratification
procedures, then mod the contract. Don't make the contractor
submit a formal claim - it is waste of everyone's time and
resources, if you intend to pay for the extra work.
I would never suggest just writing a modification which doesn't
reveal that the work is already done!! Happy Sails! Joel
on Thursday, August 24, 2000 - 05:01 pm:
Since the project manager did not have actual authority to order
additional equipment, the contractor has no right to payment,
unless it can make a case for implied authority. If you don't
want the stuff, tell the contractor to come and get it at its
own expense. If you want the stuff, and the criteria in FAR
1.602-3(d) are met, then ask someone in authority to ratify the
commitment and mod the order. When you mod the order, cite the
Disputes clause as your authority.
on Thursday, August 24, 2000 - 05:27 pm:
Want a laugh? Look up the decision of the Department of
Agriculture's Board of Contract Appeals, RMTC Systems,
AGBCA No. 88-198-1, March 21, 1991, 91-2 BCA 23873. It begins as
"In the late summer of 1986, an SCS [Soil Conservation Service]
employee, who was not a contracting officer and held no
authority to enter into a contract on behalf of the Government,
set out on the inevitable quest of computer buffs everywhere,
the acquisition of more memory."
In the course of getting funnier, the decision provides us with
some good information about ratification and the Contract
joel hoffman on Thursday, August 24, 2000 - 05:59 pm:
Can't wait to read it during a break, tomorrow, when I get
back to work.
Vern, I don't believe Anonymous should cite the Disputes Clause
as authority for the mod, unless there is a formal claim which
has determined to have merit to entitlement. Under the Disputes
Clause, the contractor is entitled to interest, by law, pursuant
to the Contract Disputes Act.
I'd hate to go from "no entitlement" to voluntarily paying for
the extra work to having to pay interest on the darned thing! I
would cite the Changes Clause or another clause, if more
appropriate. Happy Sails1 Joel
on Thursday, August 24, 2000 - 06:49 pm:
Good point about the interest. However, if the matter does fall
under the Disputes clause he's going to be entitled to interest
whether the CO cites the Disputes clause or not.
Here's a thought: If a commitment relating to a contract was, in
fact, unauthorized, then the contractor cannot submit a claim to
recover since a claim is a matter of right. See the definition
of claim in FAR 33.201. Right comes from entitlement under a
clause or breach of contract. When the Government decides to
ratify an unauthorized commitment and cite the Disputes clause
as the basis for its authority to mod the contract, the
Government is simply using its authority under the Disputes
clause to settle under the terms of an existing contract rather
than award a new contract. Make sense? I wonder.
Read the RMTC Systems decision and see what you think.
on Thursday, August 24, 2000 - 07:41 pm:
The proper action would have been to issue an modification to
the task order to add the equipment. However, the project
manager directed the contractor to ship the equipment before a
mod was issued.
The contractor complied with the direction and submitted an
invoice to the project manager who forwarded it the contracting
office for action.
This action will result in increase of the task order and will
require additional funds.
If there was no contract in place, I agree that we must get the
unauthorized commitment ratified and issue a purchase order to
pay the contractor.
The answer is not as clear when there is a contract in place.
Please note the contractor will only submit a claim unless the
GOVT does not pay. However, based on the "philosophy" that "all
unauthorized commitments must be ratified", the GOVT normally
goes through the ratification procedure. Accordingly, the only
time a claim would be submitted would be if the ratifying
official does not approve the ratification.
I wonder if the GOVT has been making payments through ratified
actions when we should have processing these actions through the
claim procedures. If I were a contractor, I would take the
direction of an GOVT personnel without authority to bind the
GOVT, if I knew that historically, the GOVT would just "ratify"
the unauthorized commitment. If I knew that I had to submit a
claim to get paid, I would certainly be more cautious.
I don't have access to Department of Agriculture's Board of
Contract Appeals or WESTLAW. Does it give any insight on what we
should be doing?
I want to thank all of you for your input!
on Thursday, August 24, 2000 - 10:42 pm:
If appropriate in accordance with FAR 1.602-3(d), your agency
should ratify the project manager's unauthorized commitment, mod
the order to add the additional equipment, and pay the
contractor after inspection and acceptance of the equipment and
receipt of a proper invoice.
If your agency decides that ratification is not appropriate,
then you should tell the contractor to come and get its
equipment at its own expense. If the contractor chooses to
submit a claim demanding payment, then the CO should issue a
final decision denying it because the Government employee who
ordered the equipment had neither actual or apparent authority
to do so and the Government will not be bound by unauthorized
Ramon on Friday, August 25, 2000 - 12:25 am:
Good grief! I got on to let Bob know I'm aware of the facts
of life with regard to the egotistical powerful and Joel that
yes, intentional, willfull actions of this sort do set me off.
Now a whole book appears!
Before I go off into the reading adventure Bob and Vern have
offered I'll simply say the following.
I used the stop light runner intentionally. Action making a
mistake whole or of relatively little consequence seems similar
to a judge letting the person going through a high yellow off
the hook. Those willfully going through a flat red are scofflaws
and dangers to society and need to be met with high risk of
being caught and credible punishment. I am disturbed by the go
along to get along culture that I hear of and have sometimes
Second, of all people, military officers should be the last to
breach the chain-of-command. I can imagine our hypothetical two
star's reaction if covering forces had been directed elsewhere
by "apparent authority" leaving his flank naked to attack.
Actually, in my limited experience, I found flag officers fairly
sensitive to procedure in this arena. The most aggressive were
civilians, sometimes trying to wear the stars or eagles of their
Lastly, if the contracting system cannot posture itself to meet
real world, legitimate short fused emergencies the system needs
reengineering, not circumventing. The first has benefit, the
latter potentially dangerous sand in the gears. With today's
computer, conferencing, and other communications technology
there is much less excuse for delays in coordinating necessary
quick actions. Oh yes, there was also that idea of the IPTs
working in parallel rather than playing ping pong with memos to
cover the people side. The process can be made to work very
fast, though it does take organization and discipline -- and a
real will to make it work.
Oh, Kennedy, it was Bob's story about the clipboard, not mine.
bob antonio on
Friday, August 25, 2000 - 07:12 am:
I was just being chatty. However, in answer to your last note,
the Air Force has an idea in its "Corona" exercise. Here is the
article from the Hickam Kukini. Somewhere around the middle of
the article, placement of contracting staff is discussed for the
joel on Friday, August 25, 2000 - 10:02 am:
Anon and Vern - Just read the RMTC Systems Case. I have to
admit that the writer made a dry subject interesting, through
Anon - (1986 time frame) a Soil Conservation Service user sought
more memory for his computer and it was approved. So he called
around for the best price and found it at RMTC. The enthusiastic
sales person said they could ship it right away and asked for a
PO number from the user. The user gave them the only number he
had, which was his request case number and said he would go
directly to his procurement shop. Then he sent everything over
to procurement, thinking they would buy it from his source. Of
course, they went out and did their own thing, finding a cheaper
source. In the meantime, RMTC shipped out their memory. Upon
receipt, the user called up Contracting and asked what to do. He
was told to send it back and did so. RTMC checked with some
contacts about what to do and was told to ask the Contracting
Office to ratify the unauthorized commitment. The KO basically
determined that since the Government didn't accept the shipment,
there was no benefit gained, thus no need or even possibility of
ratification under the test conditions in FAR. RTMC then
submitted a claim for abour $1,100 or so in "re-stocking fees"
and $25 shipping fees. The KO denied it and RTMC appealed to the
AGBCA. AGBCA dismissed the appeal for lack of jurisdiction
because it could not find any basis for a binding contract - no
apparent or implied authority - the vendor is charged with
knowing the authority of the purchaser - and this is important -
no benefit received by the Government. Since no contract, no
jurisdiction - plus no benefit, so the action didn't meet the
test for voluntary ratification.
I suggest you ratify the action and mod the contract. Apparently
it is too late to send back the merchandise, if the Government
is using it. Why make the vendor submit a claim? You can teach
him a lesson by sending him a letter, warning him. Happy Sails!
on Friday, August 25, 2000 - 10:41 am:
Back to Anonymous's issue:
It has just dawned on me that Anonymous considers ratification
and dispute to be alternative procedures. I have not been
thinking that way, but maybe I'm wrong. Maybe ratification and
dispute are alternative procedures.
Anonymous may be reacting to FAR 1.602-3(b)(5), which says:
"Unauthorized commitments that would involve claims subject to
resolution under the Contract Disputes Act of 1978 should be
processed in accordance with Subpart 33.2, Disputes and
Upon re-reading that passage, I wonder what it really means.
Does it mean (a) that when someone has made an unauthorized
commitment in association with an existing contract the CO
should follow the disputes procedure instead of the
ratification procedure, or does it mean (b) that the CO must
follow the disputes procedure in conjunction with the
Bear with me, set aside practical realities, and think about
A working-level CO (below the level of chief of the purchasing
office) issues an order for specified equipment. The project
manager, who has no contracting authority, contacts the
contractor and requests additional equipment.
The contractor was notified in writing that the project manager
has no authority to order supplies or services, and contract
administration has been consistent with that notification (thus
eliminating implied authority). Neither the project manager's
superiors nor the CO had any knowledge of the project manager's
actions (thus eliminating constructive ratification).
The contractor ships the additional equipment, expecting the CO
to modify the original order, and the CO discovers what the
project manager has done when the receiving dock notifies him of
the discrepancy between the order and the shipment. Upon
inquiry, the CO learns that the requiring activity wants the
additional equipment and has funds for it.
The commitment was unauthorized. The CO is below the level of a
chief of a purchasing office. FAR 1.602-3(b)(2) and (3) clearly
state that working-level COs do not have the authority to ratify
Question: Does FAR 1.602-3(b)(5) mean that the limit on CO
authority to ratify does not apply in when an unauthorized
commitment is made in association with an existing contract?
FAR 33.201 and the Disputes clause at 52.233-1 define a claim as
a demand asserted "as a matter of right." But it is
well-established that the Government is not bound by the
unauthorized acts of its employees. (Read the RMTC Systems
decision that I cited in my earlier post. It contains a nice
discussion of this rule.)
Moreover, FAR 33.203(a) says that the disputes procedure applies
to "any express or implied contract." But there cannot be any
contract of any kind, express or implied, when the Government
employee who made the agreement has neither actual nor implied
authority. (The RMTC Systems decision addresses this.)
So, assuming that these facts are not in dispute: (1) the
commitment was unauthorized (no actual or implied authority) and
(2) there was no constructive ratification, here's are two
On what basis could the contractor assert that it has a right to
payment, either under or relating to the contract?
Under what circumstances would the disputes procedure ever apply
to unauthorized commitments?
If the contractor cannot find a basis upon which to assert a
right to payment, and if there is no express or implied
contract, how can the contractor make and certify a claim on the
basis of the disputes clause? And without a legitimate claim,
how does the disputes procedure apply to this matter? In fact,
how can the disputes procedure ever apply to an
Which leads me to my final question:
Can the CO mod the contract without ratification of the project
manager's unauthorized commitment by higher authority, or in
light of FAR 1.602-3(b)(2) and (3), would such an act itself
constitute an unauthorized commitment? (See FAR 1.602-1(a),
on Friday, August 25, 2000 - 10:52 am:
So many interesting threads in this conversation—
Given a choice between litigation and quantum meruit, lawyers
usually prefer the choice which involves less pain.
I guess the question is whether your agency really needs these
items. If your technical person is only guilty of getting out
ahead of the correct process, you probably don’t want to send
the items back.
bob antonio on
Friday, August 25, 2000 - 11:07 am:
Here are my final thoughts on this issue. First, set aside the
term "ratification" for a moment. Check the FAR Policy from
1.602-3 (b) and FAR 33.204. It is below.
"Agencies should take positive action to preclude, to the
maximum extent possible, the need for ratification actions.
Although procedures are provided in this section for use in
those cases where the ratification of an unauthorized commitment
is necessary, these procedures may not be used in a manner that
encourages such commitments being made by Government
"The Government's policy is to try to resolve all contractual
issues in controversy by mutual agreement at the contracting
officer's level. Reasonable efforts should be made to resolve
controversies prior to the submission of a claim."
To preclude, we must train and correct. Training should be
provided to project managers, officers, etc, through classes to
avoid this. From my experience, manuals and training material do
this in federal agencies. If an unauthorized committment occurs,
the contracting officer should take action to make sure the
program office knows it is wrong. The agency should support the
contracting officer with policy that corrects or removes the
program officer for repeated abuses.
I think there have been good answers about actions on the noted
situation. So I won't add anything more.
Before we move to the procedures for approval of the action, I
would ask the obvious. That is, can the U. S. Government win in
court? If we are of the opinion that we will lose, we move to
the approval process for the unauthorized action quickly and try
to avoid a claim. The approval process is spelled out clearly in
FAR 1.602-3 (c). If we meet that criteria, we approve the action
and ratification is done. Next, we contact the contractor and
settle before the claim arrives. That is what the policy states.
on Friday, August 25, 2000 - 01:40 pm:
Vern, This is in response to your questions as they relate to
your specific example:
Q: "On what basis could the contractor assert that it has a
right to payment, either under or relating to the contract?"
A: The Contractor could assert anything, I suppose. However, in
order to bind the Government, the Contractor would have to show
that there was implied authority by the PM or that the CO had
actual or constructive knowledge of the PM's actions in time to
stop or in time to minimize the Contractor's extra cost or that
the Government is obtaining the benefit of the extra equipment
and that the extra equipment could be segregated from the basic
product and shipped back to the supplier.
Q:"Under what circumstances would the disputes procedure ever
apply to unauthorized commitments?"
A: I would say that there has to be an existing contract. The
Disputes clause would apply, if the Contractor submitted a claim
pursuant to the contract, asserting that it has a right to
payment. Now, the claim may have no merit and may be dismissed
for lack of jurisdiction by a court or board. But the Disputes
Clause becomes the forum for the Contractor to seek a right to
payment as an alternative to some other type of legal action.
(I think the above also responds to the next question in Vern's
post, so I skipped it.)
Q: "Can the CO mod the contract without ratification of the
project manager's unauthorized commitment by higher authority,
or in light of FAR 1.602-3(b)(2)"
A: I don't know - its an interesting question. Technically, the
FAR seems to require ratification by someone higher than the CO
before the CO is "authorized" to execute the Mod. And
technically, the CO is not "authorized to ratify" the action.
However, Case law may state that a mod written, without
ratification by an authorized official, would still be binding
on the Government.
The law seems to recognize a binding obligation by implied
ratification, implicit or explicit adoption of unauthorized acts
by those otherwised authorized to commit the Government. So, if
the CO writes a mod, is there is a binding obligation?
Q:"(3), would such an act itself constitute an unauthorized
commitment? (See FAR 1.602-1(a), second sentence.)"
A: Another interesting question - what does the case law say?
on Friday, August 25, 2000 - 02:06 pm:
The boards ignore FAR's limitation on CO authority to ratify. I
found several relatively recent cases in which boards have found
that a CO's knowledge of an unauthorized commitment and
subsequent inaction constituted constructive (implied)
ratification. The Kumin Associates decision of the LBCA
that Bob cited illustrates this: "To the extent the Contracting
Officer knew or should have known of the change, and took no
action to countermand the directive issued by O'Malley via
Caperton, his silence or inaction constitutes ratification."
One of the reasons that I raised these points and asked these
questions was to show how confusing the FAR can be and how hard
it sometimes is to determine the intent of the FAR Council. I
don't have answers to my own questions.
It appears to me upon looking at the FAR and several agency FAR
supplements that the policy-makers withheld the authority to
ratify unauthorized commitments from working-level COs so that
unauthorized commitments would have to be brought to the
attention of higher-level managers so that they could take
corrective action. I have no idea what the FAR Council had in
mind, if anything, when it wrote that some unauthorized
commitments should be handled throught the disputes procedure.
Joel Hoffman on Friday, August 25, 2000 - 02:26 pm:
We need to remember that Contract Law is more encompassing
than the Regulations. The Courts and Boards must fill in the
blanks and try to address the inconsistencies and conflicts
within the Regulations or between the Regulations and the law
(Case Law as well as Statutory). Happy Sails! Joel
on Friday, August 25, 2000 - 04:40 pm:
Here's a quote from Contract Disputes Act Annotated, by
Robert Peacock and Peter Ting (Washington, DC: Federal
Publications, Inc., 1998), p. 1-12:
"Where a Government employee without authority makes a
commitment (to purchase supplies, for example), and the CO
refuses to ratify the unauthorized commitment, there is no CDA
[Contract Disputes Act] jurisdiction on the ground that there
was no express or implied contract."
The authors cite RMTC Systems.
joel on Friday, August 25, 2000 - 08:20 pm:
Thanks, Vern. Happy Sails!